Repo Madness: The Characterization of Repurchase Agreements under the Bankruptcy Code and the U.C.C.
Publication Date
1995
Journal
Syracuse Law Review
Abstract
The article examines the legal characterization of repurchase agreements (repos) under the Bankruptcy Code and the Uniform Commercial Code (U.C.C.), with a focus on proposed revisions to Articles 8 and 9. It argues that repos should be treated as sales rather than secured loans, primarily due to the repo buyer's unrestricted right to deal with the collateral. This characterization is supported by court rulings in cases such as In re Bevill, Bresler & Schulman and SEC v. Drysdale Securities Corp., which emphasize the transfer of ownership and the buyer's ability to engage with the securities. The article critiques current methods for determining repo characterization and proposes a test centered on the repo buyer's right to sell or pledge the collateral, prioritizing substantive property rights over economic substance. It highlights the importance of accurate repo characterization for maintaining market stability, particularly in insolvency scenarios involving major financial institutions, as seen in the Orange County bankruptcy case. The analysis underscores the need for clarity and predictability in repo transactions to prevent financial losses and legal disputes.
Volume
46
Issue
3
First Page
999
Last Page
1050
Publisher
Syracuse University College of Law
Disciplines
Bankruptcy Law | Commercial Law | Law | Securities Law | Taxation-State and Local
Recommended Citation
Jeanne L. Schroeder,
Repo Madness: The Characterization of Repurchase Agreements under the Bankruptcy Code and the U.C.C.,
46
Syracuse L. Rev.
999
(1995).
https://larc.cardozo.yu.edu/faculty-articles/1530
Included in
Bankruptcy Law Commons, Commercial Law Commons, Securities Law Commons, Taxation-State and Local Commons
